Digital Video Systems Announces Third Quarter Results, Continuing Improvement Over Prior Quarters
Company Restructuring Program Nearly Complete
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Feb. 12, 1999--Digital Video Systems, Inc. (Nasdaq:DVID - news) reported improved financial results for the third fiscal quarter of 1999, the three-month period ending December 31, 1998, over the second quarter results, which were in-line with the same period last year. DVS accelerated its program of facility closures and employee reductions during the third quarter so that one-time costs associated with the Company's restructuring program were substantially higher than in the previous quarter.
Total revenues for the third quarter of fiscal 1999, including the effect of discontinued operations, declined by 3.7% to $5.2 million, compared to $5.4 million for the prior year's third quarter, ending
December 31, 1997. The Company reported a net loss for the third quarter of fiscal 1999 of approximately $3.7 million or $0.22 per share, a more than $1.0 million improvement over the fiscal 1998
third quarter net loss of $4.8 million or $0.39 per share. The Company's third quarter loss includes one-time restructuring costs of approximately $1.0 million. As of December 31, 1998, the Company's
working capital had declined to a negative $2.2 million. The Company's order backlog increased to approximately $8.5 million, compared to approximately $1.0 million for the prior year.
DVS President & CEO, Edward M. Miller, stated, ''We are pleased with the speed in which the restructuring effort has occurred and the rate at which the new DVD-based businesses are accelerating their production and revenue.'' Miller went on to say that, ''The revenue mix within the Company of DVD technology based revenue versus discontinued products was in excess of an 80/20 split (80% representing DVD-based products) versus the prior quarter's 30/70 approximate split. The launch of the 5.2X DVD-ROM drive in October, the DVD Intelligent Loader and new 6.2X DVD-ROM drive this month
(February) will continue to lead the way for the Company's rebound. We had hoped to show stronger revenue improvement in the third quarter; unfortunately, the combination of a shortage of key components
and the lack of new funds until November negatively impacted our production plan.''
Miller further stated, ''Our order backlog which improved again this quarter is reflective of the combination of the Company's slower than anticipated ramp of production and the strong market demand
for our 5.2X and now our new 6.2X DVD-ROM drive.'' ''Our order backlog continues to indicate that our strategy of targeting a single technology concept in the DVD arena is the right strategy,'' said Miller.
Elements of the restructuring program completed during the third quarter included the closure of the Company's New Media division in Atlanta and the Panyu, China VCD player production facility, as well as the closure of the Tokyo sales office, and reduction in staff within Hong Kong, Taiwan and headquarters. DVS has consolidated the financial results of its China Operations through December 31, 1998. The Company has not yet resolved its outstanding legal issues with its Joint Venture Partner in China.
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